Serving the World's Largest Emerging Automobile Market
Home > Feature > Moderate growth in the first six months

Moderate growth in the first six months


China’s auto market in the first half of 2012 was characterized by weak demand, high inventory, expanding capacity, declining profits margins and fierce price wars.

The market saw a slight growth in sales of 2.93 percent year-on-year to a total of 9,598,100 vehicles, according to data released by China Association of Automotive Manufacturers (CAAM) on July 11. The growth rate was lower than the 3.35 percent annual growth rate of last year.




Passenger vehicle sales rose 7.08 percent to 7,613,500 units in the first half compared to the same period last year.

Among passenger vehicles, SUV sales stood out as the fastest growing passenger vehicle segment, up 30.2 percent to a total of 939,400 units.

The SUV segment has gradually replaced the B-class segment as the most profitable because of fierce competition in the latter and the falling prices of luxury vehicles.

The top three carmakers were Shanghai-GM, FAW-Volkswagen and Shanghai-Volkswagen, with respective sales posted at 620,000, 576,300 and 522,800 units. The combined sales of the top 10 carmakers reached 3,455,900 units, which accounted for 66.08 percent of total car sales.

In comparison, sales of commercial vehicles declined by 10.4 percent, to a total of 1,984,600 units in the first half.


Among commercial vehicles, the bus sector posted a positive growth of 3.6 percent through June, thanks to the rising demand for public and school buses and growing domestic highway transportation.

Beiqi-Foton, Dongfeng and JAC were the top three commercial vehicle makers, selling respectively 328,000, 305,800 and 149,100 units. The top 10 commercial vehicle makers sold 1,403,400 units, which accounted for 70.71 percent of total sales.


Independent brands losing market shares

In June, Chinese independent brands sold 499,400 passenger vehicles, up 11.82 percent year-on-year, but their market shares dropped 1.38 percentage points to 38.89 percent in total passenger vehicle sales.

The market share of independent passenger vehicles in the first half of this year fell 3 percentage points to 41.39 percent, for a total of 3,151,100 units, down by 0.16 percent from the same period of 2011.

Due to vehicle registration restrictions in Beijing and Shanghai, market shares of independent brands dropped to 10 percent from 30 percent at the beginning of 2012, according to Cui Dongshu, deputy secretary-general of China Passenger Car Association (CPCA).

According to CPCA, Great Wall Motor was the only independent automaker among the top 10 passenger vehicle makers in June, with sales reaching 209,000 units.

Other than Great Wall and SAIC Motor, major Chinese independent carmakers such as BYD, Chery and Geely had a significant drop in sales in the first half of 2012.


Market prospects in H2

Unquestionably, Guangzhou’s restriction on vehicle registrations starting on July 1 brings much uncertainty to China’s market in the second half of the year.

“The restrictions may lead to major dip in vehicle sales in the third quarter of 2012,” said Cui Dongshu.

Additionally, the ¥6 billion ($952 million) subsidy on 1.6L and smaller engine vehicles and vehicle scrapping subsidies are unlikely to help drive automobile demand this year, according to Shen Jinjun, secretary-general of China Automobile Dealers’ Association (CADA). He also believes that the recent interest rate drop would have limited impact on market demand.

But CPCA secretary-general Rao Da is more optimistic, saying that the June market performance indicates that passenger vehicle sales would see a 10 percent growth in 2012 and total automobile sales would increase by 7 percent to about 19.8 million units.

“The market will see a modest improvement, and the price war among mid- and high-end passenger cars will continue into the second half,” said Su Hui, CADA’s director of Automobile Marts. He also believes that Guangzhou’s restriction policy may help increase sales in other cities when consumers rush to purchase vehicles for fear that they might run into restriction in their own cities.



Leave a Reply